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Investment app Gather collapses after failing to repay government loan

August 12, 2024

Gather, the investment app backed by Arsenal footballer Jorginho, has collapsed into administration after failing to repay a government pandemic loan, leading to significant expected losses for taxpayers.

The app, designed to democratise access to funds from major asset managers like BlackRock, was launched by Gather International in 2019. Despite its promising start and £5.2 million investment in development and marketing, the company faced financial ruin after misunderstanding the terms of the government’s Future Fund scheme, according to recent insolvency filings.

The directors of Gather International mistakenly believed that their £3.2 million loan from the Future Fund—half of which was taxpayer money—would convert into equity upon maturity. However, Future Fund debt only converts to equity if new qualifying finance is raised. Otherwise, the fund has the option to demand repayment with a 100 per cent “redemption premium,” effectively doubling the debt when the loan term ends.

Chris Andersen, the administrator from AABRS handling the case, revealed that the company was caught off guard by the Future Fund’s strict policy of demanding repayment rather than permitting conversion to equity. The significance of correspondence from the Future Fund, which confirmed it was seeking repayment, seemed to have been overlooked by the directors, putting Gather in an untenable financial position.

Gather entered administration in May, shortly after the Future Fund issued a winding-up petition in April. Despite efforts to negotiate an extension of the loan, the government’s British Business Bank, which administers the Future Fund, ultimately rejected the request.

The collapse of Gather is a significant blow, particularly given its innovative approach aimed at young investors, with investments starting as low as £30. The app, inspired by the accessibility of music and video streaming services, allowed users to follow others’ investment choices.

Jorginho, the 32-year-old Arsenal and Italy midfielder, owns nearly 5 per cent of the business. He had expressed his desire to set an example for young footballers, encouraging them to think about their financial future early in their careers.

With the government rejecting the loan extension, Andersen has indicated that Gather’s assets will likely be sold off, with unsecured creditors, including the Future Fund, potentially receiving as little as 3.44p in the pound.

The Future Fund, established during the pandemic to support innovative companies, has come under scrutiny following this case. However, the British Business Bank remains “cautiously optimistic” that the programme will ultimately deliver a positive return for taxpayers. The bank also noted that loan extension requests had only been rejected in a small number of instances.

Neither Gather nor its representatives have responded to requests for comment on the situation.